The opinion of the court was delivered by: Sand, J.
In this Court's 2007 opinion, Fendi Adele S.R.L. v. Burlington Coat Factory, No. 06 Civ. 85, 2007 WL 2982295 (S.D.N.Y. Oct. 10, 2007), we granted partial summary judgment in favor of Plaintiffs Fendi Adele S.R.L., Fendi S.R.L., and Fendi North America (collectively known as "Fendi"), finding Defendants Burlington Coat Factory Warehouse Corporation and Cohoes Fashion, Inc., a wholly-owned subsidiary of Burlington Coat Factory, (collectively known as "Burlington") in contempt of this Court's 1987 Injunction that prohibited Burlington from selling any Fendi-branded merchandise without written permission from Fendi.*fn1 Fendi now moves for summary judgment on its remaining causes of action.*fn2 In addition, three other motions are pending before the Court: Burlington's Motion to Amend the Answer; Burlington's Motion for Summary Judgment against the Third Party Defendants; and Colton's Cross-Motion to Dismiss the Third-Party Complaint. We will also address Fendi and Burlington's objections to Magistrate Judge Dolinger's December 1, 2009 Report and Recommendation.
Fendi owns the federally-registered Fendi trademarks and is the exclusive designer of handbags, shoulder bags, purses, wallets and key holders bearing this trademark. (Pl.'s 56.1 ¶ 1-2.) Five Fendi trademarks, each registered with the United States Patent Trademark Office, are used on their products. (Pl.'s 56.1 ¶ 68.) Each of its products is individually designed, as are the components used, in a complex design process. (Pl.'s 56.1 ¶¶ 73-75.) Fendi manufactures and sells its products in two annual seasons. Fendi's authorized customers visit Fendi's showrooms during the Fall and Spring Fashion Weeks in Milan, view the collection for the season, and place their orders for specific products in specific quantities. (Pl.'s 56.1 ¶¶ 77, 84.)
Fendi contracts with small companies in Florence, Italy to assemble the products. (Pl.'s 56.1 ¶ 97.) Each assembly order is for a stated quantity of a specific product in a specific combination of materials. (Pl.'s 56.1 ¶ 102.) Fendi gives the sub-contractors a sixteen digit code for each product. The code indicates the style number, combination of materials used, and the season for which the order is manufactured. (Pl.'s 56.1 ¶¶ 110- 11.) The code is stamped on a piece of leather trim that is sewn into the inside lining of each product. (Pl.'s 56.1 ¶ 112.) Fendi monitors the coding of its products by its assembly subcontractors. (Pl.'s 56.1 ¶ 113.) As of the Fall-Winter season of 2003, Fendi began stitching a hologram label in the lining of every product. (Pl.'s 56.1 ¶¶ 117-18.) When the hologram is placed under a microscope, symbols can be seen within a genuine hologram, permitting it to be identified as authentic. (Pl.'s 56.1 ¶ 122.) A specialized vendor manufactures the hologram labels for Fendi; the holograms are delivered to Fendi's manufacturing facility and locked in a safe. (Pl.'s 56.1 ¶¶ 123-24.) One hologram is placed in each item, and Fendi tracks the number on each item. (Pl.'s 56.1 ¶¶ 125-26.)
Fendi visits its assembly contractors twice a week, monitors their work, and conducts inspections. (Pl.'s 56.1 ¶¶ 131-33.) Fendi also conducts inspections of its subsubcontractors. (Pl.'s 56.1 ¶ 134.) Fendi inspects the finished products, and if a product has not been assembled correctly and cannot be repaired, Fendi destroys the product. (Pl.'s 56.1 ¶ 141.) The products are then shipped from Fendi's distribution center directly to Fendi's authorized customers. (Pl.'s 56.1 ¶ 141.) Each purchaser receives an invoice, which includes Fendi's name, the locations of the corporate offices in Italy, the date the goods were ready for shipment, the name and address of the authorized customer, and the order number assigned to the order. (Pl.'s 56.1 ¶¶ 147-48.) The invoice also details the contents of each box and the exact quantity of each style, which is described by Fendi's style number and materials code, and a narrative description of the article. (Pl.'s 56.1 ¶¶ 149-50.) Alberto Fabbri, the chief financial officer of Fendi Group, is able to access the computerized records of all the invoices going back to 2001. (Pl.'s 56.1 ¶ 152.)
Leonardo Minerva, Industrial Director of Leather Goods and Logistics Director for Fendi, was in charge of the manufacturing of the products from September 2002 to March 2008. (Pl.'s 56.1 ¶ 154.) As part of his duties, Minerva, along with his assistant, Massimo Lepri, examined hundreds of questioned Fendi-branded items each year for authenticity. (Pl.'s 56.1 ¶¶ 155-60.) Fendi has a multi-step process to determine whether an item is genuine, which involves: (1) visually inspecting the physical characteristics of the item, such as the quality of the materials, the purported Fendi trademark, the finishing, the metallic hardware, and the way the product was manufactured; (2) checking the item against Fendi's records to determine whether the particular style has been manufactured using the correct combination of materials; (3) inspecting each of the components for conformity with Fendi's specifications; (4) examining the sixteen digit code stamped on the leather trim inside the lining to determine if it matches Fendi's internal manufacturing and design records; and (5) examining the hologram for genuineness and checking the serial number on the hologram label to see if it matches Fendi's records. (Pl.'s 56.1 ¶¶ 157-65.)
At his deposition, Minerva testified that he never saw an instance in which a Fendi-branded item had correct codes but imperfect material. (Pl.'s 56.1 ¶ 117.) Minerva testified regarding forty three Fendi-branded items that were either sold by Burlington or that were selected from their inventory during discovery. These inspections were conducted by Minerva and his assistant Lepri. (Pl.'s 56.1 ¶ 166; Def.'s Response to 56.1 ¶ 166.) Minerva testified that thirty nine of the items were counterfeit, and three items were genuine Fendi products. (Pl.'s 56.1 ¶¶ 166-68.) Burlington's principal sources for Fendi-branded handbags and small leather goods were: 546332 BC, Ltd. d/b/a/ Colton International ("Colton"); Eura Moda, Inc. ("Euro Moda"); Moda Oggi, Inc. ("Moda Oggi"); Summit Resources LLC ("Summit"); and Ashley Reed Trading, Inc. ("Ashley Reed") (collectively known as the "Vendors"). (Pl.'s 56.1 ¶ 187.) Colton, Moda Oggi, Summit and Ashley Reed have never been customers of Fendi. (Pl.'s 56.1 ¶ 189.) In 2002 and 2003, Euro Moda made occasional purchases in small quantities of Fendi-branded items from an outlet store operated by Fendi. (Pl.'s 56.1 ¶ 189.) Minerva did not inspect any Fendi-branded goods supplied by Ashley Reed to Burlington but testified that he, along with Lepri, inspected twenty Fendi-branded items supplied by Ashley Reed to Filene's Basement, Big M, Inc., Nordstrom's Rack and Saks Off Fifth. (Pl.'s 56.1 ¶ 190.) Minerva testified that the items supplied by Ashley Reed were counterfeit. (Pl.'s 56.1 ¶ 190.)
On April 12, 2004, Stacy Haigney, Burlington's in-house counsel since 1990, met with counsel for Louis Vuitton Malletier, a company that has the same ultimate ownership as Fendi, to attempt to settle a trademark infringement litigation brought against Burlington. (Pl.'s 56.1 ¶ 204; Haigney Dec. ¶ 4, 13.) At the negotiations, counsel showed Haigney a Fendi-branded handbag that had been purchased from Burlington and informed Haigney that the handbag was counterfeit. (Pl.'s 56.1 ¶ 215.) Haigney requested that counsel send him a formal letter to that effect. (Def.'s Response to 56.1 ¶ 215.) Haigney confirmed that Colton had supplied the bag to Burlington and contacted counsel for Colton regarding the handbag. (Pl.'s 56.1 ¶¶ 216-17.) In late April 2004, Haigney received a letter on behalf of Fendi, which formally placed Burlington on notice that it was selling counterfeit branded goods and demanded that it cease and desist. (Pl.'s 56.1 ¶ 218; Haigney Dec. ¶ 18.) During the ensuing months, Fendi engaged in correspondence with Colton regarding the allegedly counterfeit bag. (Haigney Dec. ¶ 19.) On August 4, 2004, Colton sent a fax to Haigney containing a copy of an unsigned letter in Italian, purportedly from Minerva, together with an English translation stating that Fendi had examined the handbag and found that it had been made by Fendi and was within Fendi's standards of quality. (Pl.'s 56.1 ¶ 229.) Fendi challenged the authenticity of the letter. (Def.'s Response to 56.1 ¶ 232.) On December 23, 2005, Haigney received another cease and desist letter from Fendi, which alleged that all of Burlington's Fendi products were counterfeit and sold in violation of the 1987 Injunction. (Pl.'s 56.1 ¶ 275; Haigney Dec. ¶ 36.) Fend-branded items were still on Fendi's shelves as late as March 2008. (Pl.'s 56.1 ¶ 21.) This Court's 2007 Opinion found Burlington in contempt, granted Fendi's motion for an accounting and disgorgement of profits, and awarded Fendi costs and attorney's fees.
II. Fendi's Motion for Summary Judgment
A court may only grant a motion for summary judgment if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The court looks to the substantive law to identify which facts are material; only disputes over facts that might affect the outcome of the suit under the governing law will preclude summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); Kinsella v. Rumsfeld, 320 F.3d 309, 311 (2d Cir. 2003). "[T]his standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson, 477 U.S. at 247-48 (emphasis in original). An issue is genuine if "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249. If the evidence is "merely colorable" or "not significantly probative," summary judgment may be granted. Id. at 149-50.
Where the moving party would ultimately bear the burden of persuasion at trial, the moving party must make a prima facie showing with credible evidence that there is no genuine issue of material facts for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 331 (1986). If the moving party successfully makes such a showing, the burden of production shifts to the non-moving party to submit evidentiary materials demonstrating the existence of a genuine issue. Fed. R. Civ. P. 56(e); Celotex, 477 U.S. at 331. "The non-moving party may not rely on mere conclusory allegations nor speculation, but instead must offer some hard evidence showing that its version of the events is not wholly fanciful." D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir. 1998). The court must draw all inferences in favor of the non-moving party. Id.
a. Admissibility of Minerva's Testimony
As a preliminary matter, we must determine whether or not Leonardo Minerva's deposition testimony is admissible. Burlington alleges that his testimony should be excluded because (1) Minerva lacked personal knowledge of the contents of the authenticity reports and (2) Minerva relied on the reports throughout the course of his deposition.*fn3
The district court has broad discretion to determine whether a witness is using a writing to refresh his or her memory or is offering the writing for the truth of something the witness can no longer recall. 20th Century Wear, Inc. v. Sanmark-Stardust Inc., 747 F.2d 81, 93 n.17 (2d Cir. 1984); Doty v. Elias, 733 F.2d 720, 725 (10th Cir. 1984); United States v. Conley, 503 F.2d 520, 522 (8th Cir. 1974). The court must ensure that the witness actually has a present recollection and that evidence, which would otherwise be inadmissible, does not inadvertently slip in for its truth. 20th Century Wear, 747 F.2d at 93 n.17. In order to safeguard against this risk of prejudice, Federal Rule of Evidence 612 permits opposing counsel to inspect the writing used, cross-examine the witness on it, and introduce portions into evidence. Fed. R. Evid. 612; see also 20th Century Wear, 747 F.2d at 93 n.17.
Burlington's allegation that Minerva had no recollection to refresh is without merit. Minerva testified that he had been conducting authenticity inspections for over four years. (Genecin Dec. Ex. 31 ("Minerva Dep.") at 12:21-24.) He described in detail the procedures Fendi has in place to protect the authenticity of its goods and identify counterfeit products. Minerva described the kits provided to sub-contractors, the codes that were placed on the products, the precise specifications of the distance between the "Fs" on Fendi fabric, the type of metal that was used for the hardware, and the manner of quality inspection that occurred when Fendi received the assembled products. (Minerva Dep. at 35:10-17.) Minerva testified that his assistant Massimo Lepri generally prepared the reports, and then Minerva reviewed the reports, discussed them with Lepri, and sometimes made corrections. (Minerva Dep. at 337:23-338:10). After Lepri signed the report, Minerva would sign the report. Nothing in Minerva's testimony suggests that he ever signed an authenticity report without conducting an inspection.*fn4 Minerva's supervision and review of the reports is sufficient to establish personal knowledge, regardless of the fact that Lepri conducted the initial inspection and drafted the reports. See United States v. Muhammad, 120 F.3d 688, 699 (7th Cir. 1997) ("[A]lthough Agent Gandolfo prepared the FBI 302 covering Muhammad's interview, [Agent Denny] reviewed that report for accuracy, made corrections to it, and signed it. In essence, the report was that of both Agent Gandolfo and Agent Denny.")
Furthermore, Minerva was entitled to consult the reports throughout his testimony. Courts have permitted witnesses to rely on notes or documents throughout the course of testimony if the witness demonstrates an independent recollection, and the testimony is of a detailed nature. See United States v. Rinke, 778 F.2d 581, 588 (10th Cir. 1985) (finding that the witness was properly allowed to read from his notes where he had established an independent recollection by embellishing on the notes and testifying regarding subjects that were not explicitly contained in the notes regarding specific content of telephone conversations); United States v. Riccardi, 174 F.2d 883, 889 (3d Cir. 1949) (trial judge did not err in permitting a witness to read a list of chattel because he "immediately recognized that the items of property involved were so numerous that in the ordinary course of events no one would be expected to recite them without having learned a list by rote memory").*fn5
Minerva demonstrated an independent recollection by going beyond the scope of the reports. Minerva identified a manufacturing number, which had once been a real Fendi number, but was now repeatedly found on counterfeit goods. (See e.g.,Minerva Dep. at 73:3-18.) He also pointed to a hologram that was peeling off of a product, while a genuine Fendi hologram is not detachable. (Minerva Dep. at 72:18-73:2.) Throughout Minerva's testimony, he compared counterfeit bags with genuine bags, describing the differences. (See e.g., Minerva Dep. at 192:23-194:7.) Furthermore, the nature of Minerva's testimony was highly detailed. He provided testimony regarding approximately sixty counterfeit products. For each item he identified multiple deviations, which demonstrated that the products were counterfeit. In addition, each product involved deciphering the legitimacy of a sixteen digit code. Given the fact that Minerva did not rely exclusively on the reports and that the nature of the testimony was detailed, we find his use of the reports was proper.*fn6
i. Trademark Infringement and False ...